Zimbabwe firm battles to recover 'sanctions' blocked funds

Gweru-based Fuest Industrial Supplies is battling to recover US$33,414 export proceeds blocked by the United States Department of the Treasury's Office of Foreign Asset Control (OFAC) seven years ago.

Fuest had exported steel billets to South Africa, through the Mineral Marketing Corporation of Zimbabwe (MMCZ), which is one of the country's state entities placed under sanctions by the United States.

The funds were paid to Fuest by a South African company Alloy Trading Africa, through FirstRand Bank, and were flagged by OFAC on a suspicion that they belonged to the MMCZ.

MMCZ is the sole marketing and agent for all minerals except for gold and silver. The Gweru-based firm has appealed for the release of the funds.

"We approached the US Ambassador to Zimbabwe Brian Nichols but he referred us to OFAC.

We then wrote to OFAC explaining that by blocking our funds because MMCZ is on the sanctions list it meant every company in Zimbabwe is under sanctions because exports of all minerals are done through the MMCZ," Fuest operations manager, Marvelous Tapfuma said.

In a letter dated January 10, 2020, seen by Business Times signed by OFAC Chief Licensing Division's Aydin Akgün, OFAC declined Fuest application for the release of the funds to MMCZ.

"As reflected by your application or by information otherwise available to OFAC, involves an interest of a sanctions target described in the Zimbabwe Sanctions Regulations, 31 C.F.R. Part 541; specifically, Minerals Marketing Corporation of Zimbabwe.

It is OFAC's policy to license the release of blocked property only in limited circumstances, most of which do not involve commercial activity.

Upon review, OFAC has determined that this blocked funds transfer does not fall within those limited circumstances.

Accordingly, licensing the release of the blocked funds would be inconsistent with OFAC policy, and your request is denied," read part of the letter.

Tapfuma said the company has written to the US Senate and US State Department for the release of the funds.

"Actually, what we did when we wrote to OFAC we copied our correspondence with the US Ambassador to Zimbabwe (Brian Nichols), US Senate Foreign Relations Committee Chairperson Senator Jim Risch and Assistant Secretary, Bureau of African Affairs, Ambassador Tibor Nagy, arguing that the sanctions you insist don`t affect the general populace in Zimbabwe are actually hurting everyone because you blocked funds belonging to general citizens."

In other letters seen by Business Times, Fuest also wrote to US President Donald Trump and the European Ambassador to Zimbabwe Timo Olkkonen. Tapfuma said the company was on the verge of sinking from the costs accumulated in the bid to recover the blocked funds.

"The blocked funds were part of a total amount of US$340,000 and when the blockage happened, the contract failed and we had a related contract worth about US$5m which collapsed as a result," said Tapfuma.

"All our operations are now grounded; we even have failed to pay tax to ZIMRA for the last 5 years"

Fuest manager Brian Zijenah said they were going to continue engaging OFAC and other relevant authorities to have the blocked funds released.

OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.

In August, OFAC said it would not punish CBZ for processing transactions for a sanctioned local bank, ZB.

OFAC had slapped CBZ with a US$385m penalty.

Recent victims of OFAC are State Security Minister Owen Ncube, Zimbabwe's Ambassador to Tanzania Anselem Sanyatwe and business mogul Kuda Tagwirei.